Heavy price cuts saw US car sales accelerate in July

Overall US sales jumped 1.8% in July, after a 1.7% increase a month earlier - although the figures came in lower than forecasts of a 2.2% rise.

Car sales jumped 6.7% - their sharpest rise since October 2001 - boosted by discount sales incentives.

But, excluding automotive figures, retail sales rose just 0.3% - half that expected by analysts.

During July, Ford and DaimlerChrysler joined General Motors in extending their "employee discount for all" offer in an effort to boost falling sales.

The latest Commerce Department figures underline the boost the move gave to the sector.

However, experts have warned that while it may have increased sales, the measure is likely to have come at a cost of cutting profits.

Petrol push

Without the surge in car purchases retail sales fared less well, with rising petrol prices behind the increase.

In fact, service station sales rose 2.6% in July mainly as a result of rising fuel prices.

Uncertainty over supplies, and security fears have driven crude prices to record highs in recent months - boosting fuel prices.

The Commerce Department added that if petrol, as well as auto purchases, were excluded then July's retail sales would have remained unchanged.

Elsewhere, department store sales fell 1% during the month - after rising 1.4% in June - while furniture store sales sank 1.3%.

Smaller declines were also noted at grocery, speciality clothing and hardware stores, as well as online retailers.

But despite several sectors experiencing declines, economists said the report highlighted the continued strength of the US economy.

They added it was unlikely to sway the US Federal Reserve from its path of "measured" interest rate hikes.

"The consumer is still in there slugging away," Ken Mayland of ClearView Economics in Ohio told Reuters.

"There is no reason to think the consumer is going to pull back into some shell and go away."